and now we're going to learn about sales tax codes sales tax codes are simply things that
determine if an item or a customer is taxable or non-taxable you can use the two codes that
are already on the list or make your own first we will use the ones already on the list for our
first example for example let's change the tax code for video to none so that if we put video
on a sales receipt no tax will come up from the main menu click list item list choose video then
in the bottom left click item edit item notice video is taxable right now but if we click the
pulldown and choose none and then click OK now when we put video on a receipt it will come up
as non-taxable now let's record a January 12th receipt to Allen for 5 video and 5 editing where
Allen paid cash and let's see what happens from the main menu click customers and their sales
receipts the date is January 12 so we have to go all the way back or forward however you want to
do it to January 12th customer paid cash and the customer is Allen now as soon as we choose Allen
New York state sales tax comes up now when we put the 5 editing on the invoice everything is fine
but look what happens when we choose video aha the column of tax says none video is non-taxable so
when we add five items of video and then push tab notice the sales tax did not change when we added
video that's because this $56 is the 8 percent tax on the $700 of editing but the $1500 of video
is not taxable you should also notice that we can change the taxable or non-taxable code at
the moment we make the receipt for example if we make editing non-taxable then there's no tax but
let's switch it back if we make video taxable then the tax goes up but let's switch it back
so you can clearly see this $56 is 8% of only the $700 of editing and that video has been saved as
non-taxable click Save & close and then when you look at your sales tax reports you can see that
only the $56 has been added to the New York state sales tax if we double click here you
see it says only $56 is added to New York state tax not the whole amount we can also change the
tax code of a customer let's change Allen's tax code to none from the main menu click customers
customer center then double-click Allen to get the Edit customer window then click sales tax settings
and change Allen's tax code from tax - non-taxable then click OK now let's see what happens when we
record a transaction for Allen and now let's try that same transaction on January 13th and see what
happens from the main menu click customer enter sale receipt the date is back on January 13th
the customer is Alan and of course he paid cash now obviously when we choose video the tax will
still be none but notice what happens when we choose editing the tax is still none that's
because even though editing is taxable we made Alan the customer not taxable this message is
simply explaining to you that you have the ability to change the tax code at the minute that you make
the receipt and of course if you change the tax code the results down here will change accordingly
but we already discussed that so we'll click Save and close and no there will be no change
to the tax reports you can make your own tax code the only difference is that the name of the code
will be different but not the effect the result on the transaction and the result in the reports
will be exactly the same whether you use your own tax code or you use a tax code that's already on
the list we're going to make our own tax code just to show you the name of it will be charity and the
abbreviation will be cty and it will be a code for transactions and items and customers who are not
taxable from the main menu click vendors sales tax sales tax code list now we have one for taxable
and one for non-taxable in the bottom left click sales tax code new this one will be a non taxable
code the abbreviation will be capital C T Y and the description will be charity this means if
we put it on an item it means the item is going to charity and if we make this a customer's tax
code it means the customer is a charity we click okay and now we have our new tax code on the list
of sales tax codes and now we'll use our new tax code in this example first we'll change the tax
code for candy to cty from the main menu click customers customer center then double click candy
and you get the Edit customer window with candy inside click the sales tax settings and shoot
change the tax code from tax to cty charity after we click OK now quick book QuickBooks knows candy
is a charity and now let's try recording a January 14th receipt to candy 4/5 video which is already
non-taxable and 5 editing where the item is still taxable let's see what happens from the main menu
click customers enter sale receipt the date is January 14th and the customer paid cash and
the customer is candy now we know that video is already non-taxable but notice even though video
is not taxable the tax code that came up was not the non-taxable sales even though that's what we
put for video the tax code that came up is the one for the customer so they're both non-taxable but
this is the one for the customer that means the tax code for the customer supersedes the tax code
for the item even if we choose editing and editing is taxable this customer uses this tax code so it
doesn't really matter what tax code is on the item as long as the tax code for the customer
says non-taxable and the new tax code shows non-taxable so there's no tax let's make sure we
put 5 and when we click save and close again there will be no change to any of the sales tax reports